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Can I Buy Land With my VA Mortgage?


Well, the answer is “sort of.” But you have to be committed to building on it. That generally means you’re already under contract to build a home and you just need the land to put it on.

The vast majority of VA Mortgage deals are for a single family stand-alone residence or condominium. But the VA program is much more flexible than that.

Yes, to be eligible for VA financing, the home must be occupied by the veteran for a certain period of time. But the home doesn’t actually have to be completely built at the time of closing. Rather, VA rules allow you to buy land, and then put a home on it. The home can be a brand new, original construction, it can be a pre-fab, or in some circumstances, it can be a mobile home, according to Bruce Reichstein of VALoans.com.

The actual process is trickier than Reichstein implies, though. New construction or proposed installments of prefabs, mobiles and modular homes require a lot of red tape, including the pre-approval of VA officials, generally via VA-approved inspectors. That can be a time consuming and expensive process, and lenders tend not to want to get involved in those situations.

If you are installing a mobile home, it must have a permanent foundation. The taxpayer is guaranteeing these loans, and your fellow taxpayers don’t want to be in the position of financing a house, and then having to foreclose on an empty lot.

You will have to close on the new construction or the home at the same time. VA rules allow for new construction, and you can use them to buy land where the home “is situated or will be situated.” But you cannot generally use a VA loan to buy land and then wait an indefinite period of time before building. Remember, the property has to be occupied by the veteran. You can’t use it for unoccupied investment property.

If you’re putting in a prefab or manufactured home, be prepared to submit the following documents:

  • Specifications for the foundation and a plot plan as required for conventional site-built homes.
  • In double-wide homes, a detail of the mating line piers, if applicable.
  • A foundation plan showing the location and a cross-sectional detail of the supporting piers. In all cases, include drawings of the foundation anchorage details.
  • A floor plan of the unit and exterior elevation drawings/photographs of the front and rear of the home, unless the unit is physically located on the site to be appraised or the appraiser has access to the unit on the dealer’s lot. These may be provided in the manufacturer’s advertising or technical installation manual.
  • In states or localities that require the underside of the unit to be completely enclosed, details of the perimeter enclosure that comply with those requirements.
  • Since site conditions vary considerably from location to location, any revision needed to information provided in the manufacturer’s technical installation manual in order to comply with local requirements.
  • Appropriate construction exhibits for any other on-site improvements, such as decks, enclosed patios, garages and carports, etc., to be financed with the loan proceeds.

Properties also have to comply with minimum habitability requirements, including things like permanent cooking, eating and sleeping areas and septic or plumbing equipment. They also need to have a permanent stove, for example. If the home hasn’t been built yet, you’ll have to submit the plans for VA approval, and then build in compliance with the plans you submit.

For a complete itemization of eligibility requirements for VA financing, visit this page.

However, those are just the federal guidelines. Guidelines at individual lenders may differ, based on their own risk and lending criteria. For example, NationStar Mortgage will not underwrite a VA loan on singlewide mobile homes at all, nor will it underwrite VA loans on vacant, raw or uninhabitable land.

Builders must provide a 1-year warrantee on new construction, which can be tricky.

You also cannot put a VA home on land that is unstable. So smack-dab on the San Andreas fault might not fly. And that stilt home on a mud cliff overlooking the beach at Malibu is right out!

Also, be aware that It will likely be easier to find financing on a modular constructed home than a prefabricated home. Prefabs tend to depreciate over time, so many lenders are reluctant to finance them – especially at zero down.

The bottom line: It is possible to buy land with a VA mortgage – and then put a home on it. But you may have to shop around for lenders willing to finance the deal.

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